Firm Dynamics with Tradable Output Permits

We study firm dynamics, firm value, equilibrium permit prices and market efficiency in a natural resource industry that is managed with tradable output permits. New firms must purchase capital and output permits before they enter. Active firms must consider the economic cost of capital and the cost of owning the permit when contemplating exit. The value of the capital used in the production process has nonseparable effects on permit prices and market efficiency. Costly investment reversibility (in the firm's productive capital) and uncertainty reduce permit prices and prolong the abandonment of unproductive capital. Policies to improve economic performance are identified.     

Beyond products: services-based strategy

Services technologies are changing the way companies in every industry--manufacturers and service providers alike--compete. Vertical integration, physical facilities, even a seemingly superior product can no longer assure a competitive edge. Instead, sustainable advantage is more and more likely to come from developing superior capabilities in a few core service skills--and out-sourcing as much of the rest as possible. Within companies, technology is increasing the leverage of service activities: today, more value added comes from design innovations, product image, or other attributes that services create than from the production process. New technologies also let independent enterprises provide world-class services at lower costs than customers could achieve if they performed the activities themselves. These changes have far-reaching implications for how managers structure their organizations and define strategic focus. Companies like Apple, Honda, and Merck show that a less integrated but more focused organization is key to competitive success. They build their strategies around a few highly developed capabilities. And they outsource as many of the other activities in their value chain as possible. To help managers develop an activity-focused strategy, the authors offer a new way to approach competitive analyses, guidelines for determining which activities to outsource and which to retain, and an overview of the risks and rewards of strategic outsourcing. Throughout, they draw on the findings of their three-year study of the major impacts technology has had in the service sector.     

Consumer response to social entrepreneurship: the case of the Big Issue in Scotland

The Big Issue is the most prominent example of social entrepreneurship in the UK. Initially started as a nonprofit organisation, it is now a limited company that provides homeless individuals with the opportunity to earn an income and donates its profits to a charity that addresses problems of homelessness. The paper explores how consumer response to the Big Issue is influenced by the fact that the magazine is sold by homeless people themselves. The findings suggest that consumers buy it both because they like the magazine and because they believe that they are helping the homeless, often paying more than the magazine cover price for the latter reason. The results also reveal that consumers see the direct involvement of homeless people in the exchange positively, recognising it as an empowering process. Copyright © 2002 Henry Stewart Publications     

Relationships among levels of government support,marketing activities,and financial health of nonprofit performing arts organizations

• This exploratory study researches and analyzes the empirical effects of financial levels of government support and marketing practices on the financial health of nonprofit performing arts organizations. Declining government subsidies and increasing competition from non-traditional sources have presented these organizations with unique opportunities and challenges that call for a market-centered, as well as an art-centered approach. Financial health is critical for the long-term success of a nonprofit performing arts organization. Few empirical studies have examined the interrelationships between these key variables. This study analyzes a sample of 63 American professional symphony orchestras employing 20 years of data. The correlations among financial levels of government support and marketing activities were positive and significant, the correlations among levels of government support and financial health were negative and significant, and the correlations between levels of marketing activity and financial health were negative and varied in significance. Causal analyses were less conclusive, but significant causal relationships were found for large symphony orchestras, indicating that segmentation research may be warranted. Implications and opportunities for future research are presented which have potential application for government agencies, academic researchers, and arts organization managers, boards of directors, and donors.

Copyright © 2006 John Wiley & Sons, Ltd.     

Squeezing the bears: cornering risk and limits on arbitrage during the ‘British bicycle mania’, 1896–8

This article examines the extent to which Victorian investors were short‐sale constrained. While previous research suggests that there were relatively few limits on arbitrage, this article argues that short‐sales of stocks outside the Official List were indirectly constrained by the risk of being cornered. Evidence for this hypothesis comes from three corners in cycle company shares which occurred in 1896–7, two of which resulted in substantial losses for short‐sellers. Legal efforts to retrieve funds lost in a corner were unsuccessful, and the court proceedings reveal a widespread contempt for short‐sellers, or ‘bears’, among the general public. Consistent with the hypothesis that these episodes affected the market, this study's findings show that cycle companies for which cornering risk was greater experienced disproportionately lower returns during a subsequent crash in the market for cycle shares. This evidence suggests that, under certain circumstances, short‐selling shares in Britain prior to 1900 could have been much riskier than previously thought.     

Relational Capital: Strategic Advantage for Small and Medium-Size Enterprises (SMEs) Through Negotiation and Collaboration

Collaborative entrepreneurship research suggests that organizations will soon pursue more collaborative relationships throughout a worldwide network of firms, driving a strategy of continuous innovation, specially small- and medium-size firms (SMEs). Tapping into a body of literature that focuses on the importance of human capital in driving long-term success, we merge ideas of collaborative research with a growing body of work on human capital or human resource management in SMEs. Our paper states that it is not the human, per se, that is the real asset but the relationships those humans have that are the most inimitable and important capital. We will discuss how companies use relational capital as the basis for collaborative entrepreneurship. Consistent with our hypotheses, our exploratory study suggests that smaller firms place more value on relational capital than do larger firms. We also have some indication that the key capital that differentiates low vs. high performance, regardless of firm size, is the relational capital aspect. To sum up, relational capital is a fundamental asset for firms, but especially for SMEs, and high performing companies are those that are able to negotiate with others and develop collaborative agreements, thus placing a high value in relational capital.     

Great Galway Goslings: Organizational Context of Managerial Accounting*

This case seeks to enhance student understanding of the relationship between accounting information and the order fulfllment and production activities of a manufacturing frm, Great Galway Goslings. Great Galway Goslings manufactures goose sculptures and has been suffering losses in recent years. Students draw on the skills they learned in financial accounting to analyze the company's order fulfllment activities, identify economic transactions, and prepare journal entries. The case provides a link to managerial accounting topics as students use segment financial statements to create contribution margin income statements, perform break‐even analyses, and recommend whether Great Galway Goslings should keep its retail business segment. Students will become familiar with the key features of business process management (BPM) and the extensive, real‐world activities that a manufacturing entity engages in to fll an order. Students will analyze the company's existing order fulfllment process and apply their knowledge of BPM to recommend process improvements for Great Galway. This case contributes to the accounting case literature by serving as a bridge from financial accounting to managerial accounting, intertwining many topics from managerial accounting into one cohesive case, and providing real‐world business process knowledge. Student feedback indicates that, overall, the case met its stated learning objectives. Great Galway Goslings is appropriate for an undergraduate introductory managerial accounting course but can be adapted to the equivalent graduate‐level course or an accounting information systems course.